All Forum Posts by: Account Closed

Steve Olafson you bring up a great point. Having the passive income to decide not to chase deals is certainly a nice luxury to have. You don't "need" the income and can sit back and wait for the market to change, or as you mention, decide to stay local and just wait it out. I'm curious though. Let's say you were faced with this market 10-15 years ago, or just as you were getting started in investing. What would you do then? Keep buying deals or what?

I started my career as a receptionist for a real estate development firm. Worked my butt off and did everything they wanted. Commuted 1 hour each way at the start. 2 years later was made a project manager. Worked there for 6 years, then moved on to even more responsibility elsewhere. It can happen. You have to be willing to swallow your ego and do everything, no matter how small it feels. And all with a good attitude and smile on your face.

Ben Leybovich I agree 100% about automation. It frightens me that we we going to end up with a two-tiered society where one is either rich or poor, nothing in between. I think there will certainly be a senior housing boom, but I think that demand is going to be filled by new development. Seniors will likely want bigger units (they have a lot of stuff) and I'm not sure today's apartments will fill that need. My mom now lives in an apartment, my dad and stepmom just downsized from a house to a townhome and my mother in law just sold a large house and bought a 1,500sf condo. So I'm seeing this surge begin within my own family. Steve Olafson have you considered venturing out of AZ, or at least smaller markets outside PHX? I think it depends on your goals a bit today too because we are still finding deals (I toured one in Columbus and one in Indy this week) that both should provide that pop if bought right. But they are certainly fewer and far between now. I've been approached recently with an opportunity to start a multifamily division for a large developer here in town and be the president of that arm of the company. I am floored by the opportunity, however, I'll need to buy a ton of units over the next few years to keep my family fed and feels like it might be the wrong time due to where we are in the cycle. I think I can buy the deals, but concerned about performance of them 2-5 years down the road. As you know, you have to buy right on your first few otherwise you can't play anymore. Jay Hinrichs good point about it being market specific. Brian Burke I agree with the SFH demand you mentioned. I know a large engine for growth in the US will be immigrants (just read 70% of new household formation between now and 2030 will be immigrant families) and I would think SFH rental would appeal to them.

Brian Burke Steve Olafson Jay Hinrichs J Scott Ben Leybovich Posted from my phone. Appeared tags didn't work in initial post. My apologies if I tagged you twice.

We know the multifamily market is on fire, largely due to low interest rates, plentiful debt and equity, and demographics. The largest group of millennials are currently 24 and 25 years old and in their prime renting years. My personal belief is that these demographics are pushing the apartment markets to heights it had never seen before. This run of strong performance may last a few more years. It has also been widely publicized, however, that studies say 90% of millennials want to own a home someday. Do you think the single family market, most likely entry level homes, will see a similar incredible run in the coming years when we have more job growth and these millennials start buying? I understand the challenges with high levels of student debt and other obstacles, but marriage and then kids are usually what people people to move out of apartments and into homes. Curious what people think and if this is on anyone else's mind? Brian Burke Steve Olafson Jay Hinrichs J Scott Ben Leybovich

Most accredited investors are not putting their money into crowd funding platforms. Most still prefer experienced syndicators with a long track record. I think crowd funding is changing things a bit, but more so that it opens up larger investments to smaller investors. Not sure what effect it will have on where accredited investors look to invest their capital.

Seth Mosley Ned Carey hit the nail on the head! 5-yr terms have worked extremely well during the past several years because rates have moved down. They may seem less risky to people who had good luck during that time period. But I think eventually they will go up and that might be an issue for some. The smart investors I know run sensitivity analysis to see what their exit looks like with higher rates and higher caps. One way to mitigate the risk upfront. If the deal still works on a refi with rates 250 bps higher, then you might be safe. If it doesn't, you are rolling the dice unless you borrow at a low LTV.

@Patrick Britton 

 I find it ironic that you say all debt is bad, yet your profile says you are a lender.

What is the interest rate on the loan?  That's a KEY piece of info that's missing.

For example, I graduated from college 15 years ago and I have purposely not paid off my college loans yet, even though I have the capacity to do so.  Why?  Because my interest rate is fixed at 3%.  Since I have the income to handle that debt payment each month with ease (it's about the cost of a really nice dinner for 2 with wine), I choose to only pay the minimum each month and use my capital to invest, where I can earn a substantially higher return.

Also, keep in mind.  If you have no experience, it's not like it's necessarily an equal "either or" consideration.  You may very well lose that $20,000 on your first flip if you don't know what you are doing.  That said, in my opinion, if you have the fortitude to bounce back from that, it's probably the best $20,000 in educational money you ever spent.

Franklin Anderson you said you'd hate to let this go? Why? First rule of investing is not to get emotional and buy a bad deal. This is a bad deal. Move on and spend your time finding one that actually makes you money! The company I work for owns 9,000 units. We look at hundreds of deals per year and usually only buy 7-10. You have to pass on deals that don't work, no matter how you feel about them. You are in this business to make money.